Let’s have some good news: the systems price of electricity is coming down: in the 3m to 11 June, the System Price of Electricity was down 37.9% from the 1Q average, and was down 40% yoy. There’s a small spike at the moment - either owing to Britain’s solar panels not working in the sunshine, or reflecting the curious tendency of prices to spike around the end of regular price-setting periods. But still, this can only be good news.
Will the price you pay come down quite as fast. Probably not, because somewhere between 37% and 44% of your electricity is now paying ‘government charges and levies’ according to work done by Imperial College, London.
Even to my jaundiced and sceptical eye, this seems an absolutely incredible proportion. So let’s see how Imperial breaks it down:
First, there is a ‘Renewable Obligation’. This was one of the early green policies, which forced suppliers to buy Renewable Obligation Certificates (ROCs). And here’s the rub: although these ROCs are no longer active, the RO payments you make have been retained. They make up 15-20% of your bill.
When the RO scheme was phased out, it was replaced by a Contracts for Difference (CfD) charges, which are ‘to make renewable generators payments more predictable and stable.’ Great - that’s another 8% on your bill, in addition to the 15-20% you are still paying for the now-defunct RO scheme which the CfD charges replaced. Good one.
Feed-in Tariffs put a further 5-6% on your bill. You pay these to promote small scale renewable generator projects.
Of course, there’s a Climate Change Levy, which is used to . . . . fix the climate, I suppose. Another 7-8% on your bill.
And nearly finally, there’s a special winter-evenings surcharge, which is meant to ‘secure future electricity supply, while promoting renewable investments’. It’s another 2% on your bill. It will probably not have escaped your notice that this isn’t working well enough, which is why it people are now being paid (by you) not to switch the lights on.
The good news, of course, is that the government gives you a VAT break on electricty, charging it at only 5%.
Remember these charges when a politician or lobbyist or journalist babbles on about ‘cheap green energy’ and the thousands of ‘well paying green jobs’ which will emerge if only we pile yet more (of your) money into green technologies. It isn’t cheap, it’s extraordinarily expensive, quite profligantly hoovering cash from your wallet.
Like this chap, for example, who reckons doubling down on Britain’s ‘expensive energy policy’ will "cut bills, create jobs and provide energy security".
How so?
As far as I remember, these subsidies are really for green energy built out in the past; the new stuff is much cheaper and much more efficient and therefore there will be far less of a 'green levy'. I seem to remember Ambrose Evans Pritchard of the Telegraph writing that some of the new offshore windmill auctions were won at a strike price so low they might end up paying into the system. That said, I haven't looked into the actual numbers for ages (and even then it was only a cursory look), so I cannot say for certain. In theory, this could be part of a high quality industrial policy. We have made the decision to go for renewables, and so have Europe and NA (and even China). We have pretty much the largest offshore wind market in the world. We could leverage that and tell companies that if they want access, they have to build X% (preferrably >90%) off all components and their assembly in Britain: no domestication, no access. That would not only directly create good quality jobs, but also secondary jobs in the supply chain and R&D spend, too. Then, we could also start capturing export markets with our world class industry that would have, because of the size of our market, a Ricardian Advantage. But we don't; we just buy from the lowest bidder and bolt them together here -- which often means huge carbon expenditure as they're made in high carbon economies and then transported half way around the world.
The direct problem, so far as I can see, is that the media never ask any of these questions. At least, not any of the media that seem able to bring any pressure to bear. There are plenty of people asking questions related to these issues but they don't seem to be able to make a dent. Why not?
Bah!!